AgriDigital Australia external relations manager Bridie Ohlsson gave this year’s Mobile Tech agri-tech conference a first-hand insight to how Australian grain growers are starting to use the ground-breaking technology.
Blockchain is best described as a type of digital ledger that records transactions chronologically in blocks of data. When used for supply chains that data is open to selected parties to view as the service or product moves through the supply chain.
At its most simplistic level each block of information can be likened to a “Google.Doc” that is capable of being shared by multiple parties along the supply chain.
A further version of that will involve a “permissions” programme where it can be specified what parties can see what information. But unlike a Doc, information cannot be changed or deleted. If changes or additions are required a new version of the Doc is made (a new block), so the entire history can be traced.
Despite being associated with sometimes controversial cryptocurrencies, they are only part of the technology, Ohlsson said.
There are three key problem areas in the global agri-supply chain blockchain could help resolve.
The first is farmers not getting paid on delivery of their produce or raw material and relying on liquidity and trust of their buyer for the standard terms of trade period.
Secondly, buyers of produce often do not have access to finance to pay farmers quicker and, thirdly, consumers often do not know exactly where their food has come from.
“And that is when we have a global market of about US$500 billion in fake goods.”
Ohlsson cautioned that having only been around for about eight years, blockchain is far from a polished technology.
But it is drawing big players in from the production, logistics and finance sectors associated with agricultural production. They include shipping giant Maersk, Rabobank and the Walmart chain.
“Maersk in a trial were able to move 200 export documents into a single blockchain transaction document.”
Last year Maersk NZ chief executive Gerard Morrison described how at the “beta” stage of an IBM-Maersk initiative Maersk identified 200 communications by multiple organisations needed to send a shipment of flowers from Kenya to Rotterdam.
Typically the fresher the product, the greater the paperwork and the slower the shipping process can become, with that product’s freshness being sacrificed.
As NZ exports like chilled lamb face increasingly tight shipping deadlines and short shelf times on arrival in supermarket chillers, any reduction in time for transfer and document approval is particularly welcome by exporters.
Despite doing a good job of moving food and fibre products globally, Ohlsson said the industry still experienced a slow, expensive and complex process with a vast volume of documents and a general lack of trust between parties.
“There are not many times people point to agriculture and say ‘this technology is for you’ but this is one of them.
“Blockchain offers a solution to put transparency and trust back into supply solutions.”
In 2016 the first grain contract settled using blockchain was recorded at Dubbo, New South Wales.
“A grower who would previously have his asset (crop) lost subject to a 35-day payment period delivered his wheat, had the vital information on protein etc recorded, his delivery was fed through a blockchain application as a digital asset, with payment made into a digital wallet.”
The transaction paid in “agri coin”, the equivalent of one Australian dollar. Industry was working hard to get an accepted version of Bitcoin to use as a regular blockchain payment currency.
Similarly, blockchain has been used to prove a delivery of organic oats was indeed organic and remained verifiable throughout the supply chain, right to the consumer. The bundles of data proving the oats’ veracity (assertions) ultimately verified their point of origin to the consumer and ensured the grower received the premium promised.
Ohlsson cautioned blockchain is not without its flaws, including the age-old risk of “garbage in-garbage out” as in any programming system.
“But it is also good at real time auditing to identify those areas where this can occur.”
She welcomed work being done by Rabobank examining financing methods through blockchain.
“No one wants to end up with agri-coins but we do not want to have to go back to traditional banks through converting currency.”
She said a report is due out very soon from Rabobank on bit coin currency use for agri-trading.
